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The American Opportunity Tax Credit is set to expire after December 31, 2012 unless it is extended by Congress. The American Opportunity Tax Credit is a refundable tax credit for undergraduate college expenses. The credit provides up to $2,500 in tax credits on the first $4,000 of qualifying education expenses. Up to 40% of the credit is refundable, meaning that it can generate a larger refund. If you qualify, the American Opportunity Tax Credit can be used to offset higher education expenses paid in 2012. The American Opportunity Tax Credit provides qualified students or eligible parents with a great tax deduction. During this summer break, eligible tax payers need to ensure they are set to receive the full benefit of the tax credit. Eligible tax payers should consider paying their 2013 tuition expenses in 2012 in order to receive the full entitlement of the American Opportunity Tax Credit before it expires. For more information on this tax credit, visit our Knowledgebase here.
We are extremely proud of the men and women of the United States Military. Service members and their families sacrifice a lot and face unique obstacles thrown at them daily. Understanding all of this, TaxSlayer.com wants to ensure they understand special tax benefits that are available to them. We want them to be aware of 9 commonly missed tax benefits: 1. Moving Expenses You may be able to deduct some of your unreimbursed moving expenses, if you are a member of the Armed Forces on active duty and you move because of a permanent change of station. You can also deduct moving expenses if you are out of the military and your move is closely related to the start of a new job location, and you meet certain tests. 2. Combat Pay Most enlisted military personnel or warrant officers know that if they serve in a combat zone for any part of a month, that all their pay received for military service during that month is not taxable. Military officers are eligible to receive tax free pay as well but it could be capped at the highest enlisted pay, plus hostile fire or imminent danger pay received. One little known fact is you can elect to include your nontaxable combat pay in your ‘earned income’ for purposes of claiming the Earned Income Tax Credit. 3. Extension of Deadlines Qualifying members of the military can get an automatic extension for filing tax returns, paying taxes, filing claims for refund, and taking other actions with the IRS. 4. Military Uniform Cost and Upkeep You can deduct the cost and upkeep of uniforms that military regulations prohibit you from wearing when off duty. If you receive any allowance or reimbursement for the services you receive you will need to reduce your expenses by those amounts. 5. Joint Returns A power of attorney may be used on joint income tax returns if one spouse is unavailable due to military duty. 6. Travel to Reserve Duty If you are a member of the US Armed Forces Reserves, you can deduct unreimbursed travel expenses for traveling more than 100 miles away from home to perform your reserve duties. 7. ROTC Students Subsistence allowances paid to ROTC students participating in advanced training are not taxable. However, active duty pay – such as pay received during summer advanced camp – is taxable. 8. Job hunting expenses You may be able to deduct some costs you incur while looking for a new job after separating from the military. Expenses may include travel, resume preparation fees, and outplacement agency fees. 9. Forgiveness of Decedent’s Tax Liability Tax liability can be forgiven, or if already paid, refunded, if a member of the U.S. Armed forces dies while in active service in a combat zone; from wounds, disease, or other injury received in a combat zone; or from wounds or injury incurred in a terrorist or military action. If filing a joint return only the decedents part of the joint income tax liability is eligible for the refund or tax forgiveness.
TaxSlayer.com continues to make every effort to keep you informed on important tax topics. The number of customers who file their tax returns using an IRS supplied ITIN continue to grow. Many taxpayers in similar situations are subject to new requirements. On June 22, 2012 the IRS announced a first step in what is expected to be a wave of changes to the ITIN application process. These changes are currently in effect until the end of this year, although changes should carry over and be expanded on for the 2012 filing season. The IRS anticipates that very few people should require ITINs between now and the end of the year. The new requirements will affect most of those applicants that submit the ITIN application, or form W-7. In most cases this form is submitted along with a 1040 tax return. These interim changes go into effect immediately. The IRS will monitor feedback from this campaign and make final decisions on how to proceed before 2013. These changes are being made in an effort to protect the integrity of the system while minimizing taxpayer impact. Effective immediately the IRS will only issue ITINs if the application meets the new requirements. Applications must now be accompanied by original supporting documentation or a certified copy FROM THE ISSUING AGENCY. For example, you must include original copies (or certified agency copies) such as passports and birth certificates when applying for an ITIN. In the past the IRS has accepted notarized copies of these documents when processing an ITIN request, this will no longer be the case. This required documentation can be submitted by mail or can be handed over at a local IRS office. If you choose to deliver the documents in person please know that they will be held and forwarded to the ITIN processing department. Per the IRS and their press release here, the following groups will not be subject to these changes. • Military spouses and dependents without an SSN who need an ITIN (Military spouses use box e on Form W-7 and dependents use box d). Exceptions to the new interim document standards will be made for military family members satisfying the documentation requirements by providing a copy of the spouse or parent’s U.S. military identification, or applying from an overseas APO/FPO address. • Nonresident aliens applying for ITINs for the purpose of claiming tax treaty benefits (use boxes a and h on Form W-7). Non-resident alien applicants generally need ITINs for reasons besides filing a U.S. tax return. This is necessary for nonresident aliens who may be subject to third-party withholding for various income, such as certain gambling winnings or pension income, or need an ITIN for information reporting purposes. While existing documentation standards will be maintained only for these applicants, scrutiny of the documents will be heightened. ITIN applications of this category that are accompanied by a US tax return will be subject to the new interim document standards. Some taxpayers who have already begun the application process may be required to submit updated copies of documentation. The IRS will instigate contact if this is the case and no further action is required until that point. You cannot file your W7 along with a return prepared on TaxSlayer.com and filed electronically. You must print and mail the return along with the supporting documentation. If you have questions please contact our support team at email@example.com.
The IRS has recently issued a new alert on a phishing technique directed toward members of the military, retirees, and civilian employees. Phishing is a criminal attempt to acquire personal information such as social security number, username and login information, credit card numbers and more. More often than not these attempts are electronically based and present themselves as legitimate emails and/or webpages. You should always be vigilant when giving out your personal information and should rarely if ever provide this information to an unknown source. Never enter this information after following a link from an email or suspicious website. This new scam appears to be an email from DFAS (Defense Finance and Accounting Service) and even appears as a .mil email address. The email promises pthe possibility in increased availability for disability compensation from the Department of Veterans Affairs and then asks the recipient to send off various forms to verify eligibility. Once these forms are sent the scammers will use the information on them to instigate identity theft. The IRS is actively pursuing this case and others like it but vigilance is key. As soon as this threat is neutralized there will undoubtedly be another to take its place. The IRS maintains a list of current phishing scams that is constantly updated. You can access this list here. Please know that TaxSlayer.com will NEVER request your personal information via email and ONLY through our secure servers.